Cryptocurrency markets remained on the back foot on Friday as macroeconomic signals from Japan, one of the world’s largest economies, added to uncertainty fueled by the Iran war.
Bitcoin hovered near $77,800 after struggling to break above Thursday’s high of $78,700 in early Asian hours, according to CoinDesk data. The broader uptrend that began in late March near the $65,000 mark appears to have stalled since Wednesday.
Ether (ETH), the second-largest cryptocurrency by market cap, was trading around $2,300, down 0.8% since midnight UTC and underperforming bitcoin’s relatively modest 0.6% decline.
The cautious tone in the crypto markets coincided with new inflation data from Japan. The country’s business services price index (CSPI) rose 3.1% year-on-year in March, beating forecasts of 3.0% and underscoring persistent price pressures in the services sector.
Additional government data showed core inflation rose to 1.8% in March from 1.6% in February, marking the first acceleration in five months. Headline inflation edged up to 1.5% from 1.3%, although for the second straight month it remained below the Bank of Japan’s 2% target. Meanwhile, core inflation, which excludes both fresh food and energy, fell to 2.4%, the lowest level since October 2024.
The rise in headline inflation is consistent with rising energy costs associated with geopolitical tensions, particularly disruptions to oil shipments through the Strait of Hormuz amid the ongoing Iran conflict.
apan, a major crude oil importer, remains particularly vulnerable to such price shocks. WTI crude futures have risen over 40% to $96 since the start of the Iran war in late February.
Market participants are now turning their attention to the Bank of Japan’s upcoming policy meeting. Analysts at InvestingLive suggest a change of tone may be imminent.
“The Bank of Japan looks set to hold fire next week, but issues a pointed warning that interest rates are headed higher, with June firmly in play as war-driven inflation risks grow,” analysts said.
Hints of tighter monetary policy and potential rate hikes could lift the Japanese yen (JPY) and affect global market sentiment. That’s especially plausible now, given that speculative positioning in the yen is currently bearish according to the latest CFTC data. As a result, there is room for a sharp bullish reaction in the yen if the Bank of Japan turns hawkish.
As for the broader market impact, a stronger yen may not be favorable. Historically, the yen has been used to finance the purchase of risky assets worldwide. A sudden appreciation of the currency can therefore trigger a liquidation of these trades, which leads to increased risk aversion.
Speaking of the Iran war, Iran deployed additional naval mines in the Strait of Hormuz this week, according to Axios. Ship traffic through Hormuz, which
accounts for 20% of the world’s seaborne oil, has fallen sharply since the conflict intensified.
The Pentagon warned lawmakers that it would take at least six months to clear mines in the strait, with the process only beginning after the war ends. It also warned that US inflation could remain high this year, potentially making it harder for the Fed to cut interest rates.
